Document Type : Research Paper

Authors

• Behnaz Gorgich Moghaddam ¹
• Marzieh Esfandiari ²
• Reza Ashraf Ganjoui ³

¹ M.A. in Economics,, Faculty of Economics and Administrative Sciences, , University of Sistan and Baluchestan, Zahedan, Iran.

² Associate Professor,, Department of Economics, Faculty of Economics and Administrative Sciences,, University of Sistan and Baluchestan, Zahedan, Iran.

³ Assistant Professor, Department of Economics, Faculty of Economics and Administrative Sciences, University of Sistan and Baluchestan, Zahedan, Iran.

Abstract

In recent years, the Iranian economy has been subject to severe fluctuations in macroeconomic indicators such as inflation rate, exchange rate, and economic growth. Since consumption is one of the main components of aggregate consumption and a driver of economic growth, we understand how households respond to economic uncertainties. By investigating uncertainty in macroeconomic changes, the present study attempts to fill the gap in Iranian economic literature and provide a more accurate insight into economic decision-making for designing supportive policies in conditions of economic instability. This study aims to investigate the effect of macroeconomic uncertainties, including inflation rate, unemployment rate, on household consumption in Iranian provinces. In macroeconomic theories and macroeconomic theories and consumption theories, economic uncertainty can cause consumers to reduce their consumption in the market and reduce their spending or pay for luxury purchases instead, because individuals can preserve their financial resources to deal with future risks. The research method is descriptive-analytical and panels related to the provinces of Iran were used in the period 1395 to 1401. Econometric modeling was carried out using a dynamic model based on the generalized method of moments (GMM). For this purpose, macro uncertainties including inflation and unemployment were first extracted by using the GARCH model. The research findings show that a non-significant increase in the inflation rate does not affect household consumption and has more impact than shocks. However, global economic policy uncertainty and unemployment rate uncertainty have an impact on household consumption patterns.

Keywords

• Economic uncertainty
• household consumption behavior
• inflation rate
• unemployment rate
• panel models

Main Subjects

• Other innovative economic areas